LI Network
Published on: 28 August 2023 at 14:50 IST
The Delhi High Court has ruled that the Directorate General of Goods and Service Tax Intelligence (DGGI) retains the authority to pursue intelligence-based enforcement actions even when investigations are being carried out by other agencies.
In a case before the bench of Justice Vibhu Bakhru and Justice Amit Mahajan, it was observed that if one authority deems it necessary to investigate the petitioner based on specific information, such an investigation cannot be halted or obstructed due to investigations involving other entities.
The petitioner had contested ongoing investigations by various agencies, with the Directorate General of Goods and Service Tax Intelligence (DGGI), Jaipur, specifically inquiring into the petitioner’s activities.
The petitioner argued that, according to Section 6(2)(b) of the Central Goods and Services Tax (CGST) Act, DGGI, Jaipur, lacked the jurisdiction to conduct an investigation since the petitioner had already been subject to an investigation for the same period by a different agency, the Delhi Commissionerate.
The petitioner cited a circular dated October 5, 2018, issued by the Central Board of Indirect Taxes and Customs (CBIC).
This circular clarified that both Central Tax and State Tax authorities have the authority to initiate intelligence-based enforcement actions across the entire taxpayer base, regardless of the taxpayer’s administrative assignment.
The petitioner claimed that once state authorities had initiated an investigation, they were required to complete it, and DGGI, Jaipur, should not be allowed to begin an investigation concerning the petitioner.
In response, the department stated that the petitioner’s Input Tax Credit (ITC) was blocked due to communication from DGGI, Jaipur, and the petitioner’s bank account was frozen at the behest of DGGI, Chennai. Although the petitioner’s registration was under threat of cancellation due to return discrepancies, these proceedings were withdrawn after the petitioner provided invoices related to M/s Girdhari Exports.
The DGGI, Chennai, argued that it hadn’t investigated the petitioner but rather an entity called M/s Balaji Enterprises.
The provisional attachment of the petitioner’s bank accounts was based on the association of Mr. Sandeep Singhal, also the director of the petitioner’s company, with these accounts. This provisional attachment was in line with safeguarding Revenue interests. However, no investigation was conducted into the transactions of the petitioner company.
The court observed that, based on statements from the Delhi State Authority and DGGI, Chennai, while certain measures affected the petitioner, such as the blocking of ITC and provisional bank account attachment, no authority had conducted an investigation into the petitioner company’s affairs.
Consequently, the court found no grounds to obstruct DGGI, Jaipur, from proceeding with its investigation into the petitioner company.